Cohen v. Bear Stearns Companies, Inc. et al

Filing 106

OPINION: For the reasons set forth within, Plaintiffs Aaron Howard and Shelden Greenberg's motion for reconsideration and leave to amend is granted. Plaintiff must file an amended complaint within 20 days of the date of this order. (Signed by Judge Robert W. Sweet on 9/6/2011) Filed In Associated Cases: 1:08-md-01963-RWS, 1:07-cv-10453-RWS (ab)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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IN RE BEAR STEARNS COMPANIES, INC.
SECURITIES, DERIVATIVE, AND ERISA
LITIGATION

08 MDL 1963
OPINION

This Document Relates To:

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ERISA Action, 07 Civ. 10453

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Sweet, D.J.

Plaintiffs Aaron Howard and Shelden Greenberg
("Plaintiffs") have moved for reconsideration of the Court's
January 19, 2011 opinion (the "Opinion") , which dismissed
Plaintif

'Amended Consolidated Complaint ("ACC").

Plaintiffs'

motion for reconsideration was filed on February 23, 2011, and
it was considered fully submitted on April 6, 2011.

Plaintiffs seek an amendment of the Opinion to provide
that the dismissal of the ACC was without prejudice, and they
request leave to file a Second Amended Consolidated Complaint
("SACC") under Federal Rule of Civil Procedure 15(a).

For the

following reasons, Plaintiff's motion for reconsideration and
leave to amend is granted.

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Applicable Standard

A party seeking leave pursuant to Rule 15(a) to amend
a complaint that has been dismissed under Rule 12(b) (6) with
prejudice - as is the case here - must first have the judgment
"A party may seek leave

amended under Rule 59(e) or Rule 60(b):

to amend a complaint following the entry of judgment under Rule
15(a).

However, the party must first have the judgment reopened

under Rule 59 (e) or 60 (b) .
PRACTICE' 59.05 (1) (c)

II

12 J. Moore et al., MOORE'S FEDERAL

(3d ed. 1997)

(internal footnotes omitted) .

The standards governing motions under both Rule
59(e) and Local Civil Rule 6.3 are the same, and a court may
grant reconsideration where the party moving for reconsideration
demonstrates an "intervening change in controlling law, the
availability of new evidence, or the need to correct a clear
error or prevent manifest injustice."

& Trust CO'

I

Henderson v. Metro. Bank

502 F. Supp. 2d 372, 375-76 (S.D.N.Y. 2007)

(quotation marks and citations omitted) i Parrish v. Sollecito,
253 F. Supp. 2d 713, 715

(S.D.N.Y. 2003)

("Reconsideration may

be granted to correct clear error, prevent manifest injustice or
review the court's decision in light of the availability of new
evidence.")

(citing vi

Atl. Ai

Ltd. v. National

--~~----------~~~~.----------------~

2

Mediation Bd., 965 F.2d 1245, 1255 (2d Cir. 1992)); Catskill
Dev'

l

L.L.C. v. Park Place Entm't Corp., 154 F. Supp. 2d 696,

701-02 (S.D.N.Y. 2001)

(granting reconsideration due to the

court's erroneous application of a statute).
must demonstrate controlling law or
the court on

The moving party
matters put be

underlying motion that the movant bel

the

court overlooked and that might reasonably be expected to alter
the court's decision.

See Linden v.

strict Council 1707

------------~~---------------------

AFSCME, 415 Fed. Appx. 337, 338 39 (2d Cir. 2011)

(affirming

dismissal of reconsideration motion as movant did not identify
any relevant
overlooked)

i

s or controlling authority that the lower court
Lichtenberg v. Besicorp Group Inc., 28 Fed. Appx.

73, 75 (2d

r. 2002)

motion

movant "failed to demonstrate that the [lower]

(affirming dismissal of reconsideration

court overlooked any fact of consequence or controll

legal

authority at the time the court decided [the case]").

The reason for the

e confining reconsideration to

matters that were "overlooked" is to "ensure the finality of
decisions and to prevent

practice of a losing party

examining a decision and then plugging the gaps of a lost motion
with additional matters."

Pol

v. St. Martin's Press

Inc.,

~----~------------~--~------~------

No. 97 Civ. 690, 2000 WL 98057

1

at *1 (S.D.N.Y. Jan. 18, 2000)
3

(citation and quotation marks omitted).

A court must narrowly

construe and strictly apply Local Rule 6.3, so as to avoid
duplicative rulings on previously considered issues, and to
prevent the rule from being used as a substitute for appealing a
final judgment.

See In re Bear Stearns Cos., Inc. Sec.,
..

Derivative and ERISA Lit

., No. 08 M.D.L. 1963, 2009 WL

2168767, at *1 (S.D.N.Y. Jul. 16, 2009)

("A motion for

reconsideration is not a motion to reargue those issues already
considered when a party does not like the way the original
motion was resolved. II)

(quoting Davey v. Dolan, 496 F. Supp. 2d

387, 389 (S.D.N.Y. 2007))

j

ResQNet.com, Inc. v. Lansa, Inc., No.

01 Civ. 3578, 2008 WL 4376367, at *2

(S.D.N.Y. Sept. 25, 2008)

("The standard for granting such a motion is strict, and
reconsideration will generally be denied unless the moving party
can point to controlling decisions or data that the court
overlooked - matters

l

in other words, that might reasonably be

expected to alter the conclusion reached by the court. II)
(citations and quotation marks omitted)
Energy, LLC
Sept. 19

1

1

i

Ballard v. Parkstone

No. 06 Civ. 13099 1 2008 WL 4298572, at *1 (S.D.N.Y.

2008)

("Local Rule 6.3 is to be narrowly construed and

strictly applied in order to avoid repetitive arguments on
issues that the court has fully considered.

4

lI

)

(quoting

Abrahamson v. Board of Educ., 237 F. SUpp. 2d 507, 510 (S.D.N.Y.
2002».

Motions for reconsideration "are not vehicles for
app

taking a second bite at

, ... and [the court]

consider facts not in the
overlooked."
2008)

[should] not

to be facts that the court
, 288 Fed. Appx. 768, 769 (2d

Rafter v.

r.

(citation and quotation marks omitted) .

Plaintiffs have Sufficiently Established the Propriety of
Dismissal Without Prejudice

There is a strong preference for allowing plaintiffs
to amend inadequate
F.2d 195, 198 (2d
granted, the usual
complaint

/I )

eadings.
r. 1990)

("When a motion to dismiss is

ice is to grant leave to amend the
citation and quotations omitted)

Davis, 371 U.S. 178, 182 (1962)
complaint is to

See Ronzani v. Sanofi S.A., 899

i

Foman v.

(Leave to amend or replead a

"'freely given when justice so requires'")

(quoting Fed. R. Civ. P. 15(a».

The Second Circuit has stated

that it is "hesitant to preclude the prosecution of a possibly
meritorious claim because of defects
A.H. Robins Co., 607 F.2d 545, 547 (2d
dismissal with prejudice).

the pleadings."
r. 1979)

Ross v.

(reversing

Under the liberal standards of Rule
5

15(a), a plaintiff whose complaint is dismissed is frequently
given an opportunity to amend the complaint.

See, e.g., Olsen

v. Pratt & Whitney Aircraft, 136 F.3d 273, 276 (2d Cir. 1998)
(vacating judgment and permitting leave to replead) i Luce v.
Edelstein, 802 F.2d 49, 56-7 (2d Cir. 1986)

(reversing district

court's order and holding that "dismissal of the complaint
without granting leave to amend was an abuse of discretion")
(citing Foman, 371 U.S. at 182) i Harris v. Amgen, Inc., 573 F.3d
728, 736-37

(9th Cir. 2009)

(reversing district court and

holding that dismissal without leave to amend is improper unless
it is clear that complaint could not be saved by any amendment) .
In Harris, the Ninth Circuit reversed a district court's denial
of leave to amend, holding that:
A sound theory of pleading should normally permit at
least one amendment of a complex ERISA complaint that
has failed to state a claim where, as here, the
Plaintiffs might be expected to have less than
complete information about the defendants'
organization and ERISA responsibilities, where there
is no meaningful evidence of bad faith on the part of
the plaintiffs, and where there is no significant
prejudice to the defendants.
573 F.3d at 737.

Though Harris did not address a motion under

Rule 59(e), the underlying holding remains informative to the
case at hand.

6

Plaintiffs point to several factors militating in
support of dismissal without prejudice:

the ACC represents the

first consolidated complaint in this case; significant evidence
about the collapse of Bear Stearns has recently come to light;
Plaintiffs have not acted in bad faith; and the Defendants will
not be greatly prejudiced by amendment of the ACC at this stage.

Defendants have argued that the ACC, while
representing the first consolidated complaint, is derived from
many previous individual complaints.

They also contend that

much of the purported "new" evidence cited by Plaintiffs
illuminated facts which were already known.

The Court's strong preference for allowing the
amendment of dismissed complaints and the circumstances of
Plaintiffs' case, particularly ACC's status as the first
consolidated complaint and the revelation of new evidence, lead
to the conclusion that justice requires the Court to grant
Plaintiffs' request for dismissal without prejudice.

See Evans

v. Port Authority of N.Y. & N.J., No. 00 Civ. 5753, 2002 WL
418026, at *1 (S.D.N.Y. Mar. 19, 2002)

(granting Rule 59(e)

motion and permitting leave to amend complaint); In re Lehman
Brothers Sec. & ERISA

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, No. 09 M.D.L. 2017
7

(LAK)

(Pretrial

Order No. 17, Dkt. No. 338}

(granting plaintiffs' motion to

alter or amend judgment and for leave to amend first
consolidated amended complaint) .

Plaintiffs are Granted Leave to Amend under Rule lS(a)

Under Rule 15(a), "leave to amend 'shall be freely
given when justice so requires,'

[but] it is within the sound

discretion of the district court to grant or deny leave to
amend."

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200

(2d Cir. 2007)

(quoting Fed. R. Civ. P. 15(a)).

Leave may be

denied for good reason, including undue delay, futility, bad
faith, or undue prejudice.

Foman, 371 U.S. at 182.

Defendants argue that allowing Plaintiffs to file the
SACC would be prejudicial, citing the effort they have expended
in defending against the ACC and the effort they will have to
expend in fighting the SACCo

In gauging prejudice, courts

consider whether an amendment would "require the opponent to
expend significant additional resources to conduct discovery and
prepare for trial," "significantly delay the resolution of the
dispute," or "prevent the plaintiff from bringing a timely
action in another jurisdiction."

Block v. First Blood Assocs.,
8

988 F.2d 344 1 350 (2d Cir. 1993).
discoverYI and

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The parties have not begun

as discussed above

it is common practice to

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allow plaintiffs to amend their complaints following dismissal.
Furthermore

I

denial of Plaintiffs

l

motion will preclude them

from correcting the flaws in their first consolidated complaint.

Defendants

1

also contend that the SACC suffers from

the same flaws as the ACC.

This is not clearly

as the SACC

SOl

appears to have addressed the fiduciary duties of Defendants and
the reasonableness of maintaining Bear Stearns stock in the
Employee Stock Ownership Plan.

Defendants

I

arguments regarding

the viability of the SACC are better left for full argument and
consideration on a motion to dismiss.
Sec. & ERISA Lit

'1

No. 171 Dkt. No. 338)
motion to dismiss).

See In re Lehman Brothers

No. 09 M.D.L. 2017 (LAK)

(Pretrial Order

(leaving arguments regarding futility for
Therefore

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in the interests of justice

l

Plaintiffs are granted leave to amend the ACC under Rule 15(a)

Conclusion

For the foregoing reasons

1

the Plaintiffs

reconsideration and leave to amend is granted.

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l

motion for

Plaintiff must

file an amended complaint within 20 days of the date of this
order.

It is so ordered.

New York, NY
September C, 2011
-]iOBERT W.

SWEET

U.S.D.J.

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